SEATTLE and REDMOND, Wash., Oct. 23, 2017 (GLOBE NEWSWIRE) -- Global supercomputer leader Cray Inc. (Nasdaq:CRAY) today announced an exclusive strategic alliance with Microsoft Corp. (Nasdaq:MSFT) that gives enterprises the tools to enable a new era of discovery and insight, while broadening the availability of supercomputing to new markets and new customers. Under the partnership agreement, Microsoft and Cray will jointly engage with customers to offer dedicated Cray supercomputing systems in Microsoft Azure datacenters to enable customers to run AI, advanced analytics, and modeling and simulation workloads at unprecedented scale, seamlessly connected to the Azure cloud.

Cray’s tightly coupled system architecture and Aries interconnect addresses the exponential demand for compute capability, real-time insights, and scalable performance needed by enterprises today. With this new partnership, Cray and Microsoft have made it easier for cloud customers to harness the power of supercomputing and multiply their problem-solving potential. Cray and Microsoft will also bring these advantages to a new set of customers who were previously unable to purchase or maintain an on-premise Cray system.

The availability of Cray supercomputers in Azure empowers researchers, analysts, and scientists with the ability to train AI deep learning models in fields such as medical imaging and autonomous vehicles in a fraction of the time. Pharmaceutical and biotech scientists driving precision medicine discovery can now perform whole genome sequencing, shortening the time from computation to cure. Automotive and aerospace product engineers can now conduct crash simulation, computational fluid dynamic simulations, or build digital twins for rapid and precise product development and optimized maintenance. Geophysicists in energy companies can accelerate oil field analysis and reduce exploration risk through superior seismic imaging fidelity and faster reservoir characterization. All performed in days and minutes, not months and weeks.

“Our partnership with Microsoft will introduce Cray supercomputers to a whole new class of customers that need the most advanced computing resources to expand their problem-solving capabilities, but want this new capability available to them in the cloud,” said Peter Ungaro, president and CEO of Cray. “Dedicated Cray supercomputers in Azure not only give customers all of the breadth of features and services from the leader in enterprise cloud, but also the advantages of running a wide array of workloads on a true supercomputer, the ability to scale applications to unprecedented levels, and the performance and capabilities previously only found in the largest on-premise supercomputing centers. The Cray and Microsoft partnership is expanding the accessibility of Cray supercomputers and gives customers the cloud-based supercomputing capabilities they need to increase their competitive advantage.”

“Using the enterprise-proven power of Microsoft Azure, customers are running their most strategic workloads in our cloud,” said Jason Zander, corporate vice president, Microsoft Azure, Microsoft Corp. “By working with Cray to provide dedicated supercomputers in Azure, we are offering customers uncompromising performance and scalability that enables a host of new previously unimaginable scenarios in the public cloud. More importantly, we’re moving customers into a new era by empowering them to use HPC and AI to drive breakthrough advances in science, engineering and health.”

As part of the partnership agreement, the Cray® XC™ and Cray CS™ supercomputers with attached Cray ClusterStor storage systems will be available for customer-specific provisioning in select Microsoft Azure datacenters, directly connected to the Microsoft Azure network. The Cray systems easily integrate with Azure Virtual Machines, Azure Data Lake storage, the Microsoft AI platform, and Azure Machine Learning services. Customers can also leverage the Cray Urika®-XC analytics software suite and CycleCloud for hybrid HPC management.

About Cray Inc.
Global supercomputing leader Cray Inc. (Nasdaq:CRAY) provides innovative systems and solutions enabling scientists and engineers in industry, academia and government to meet existing and future simulation and analytics challenges. Leveraging more than 40 years of experience in developing and servicing the world’s most advanced supercomputers, Cray offers a comprehensive portfolio of supercomputers and big data storage and analytics solutions delivering unrivaled performance, efficiency and scalability. Cray’s Adaptive Supercomputing vision is focused on delivering innovative next-generation products that integrate diverse processing technologies into a unified architecture, allowing customers to meet the market’s continued demand for realized performance. Go to www.cray.com for more information.

All figures in this release are based on U.S. GAAP unless otherwise noted. A reconciliation of GAAP to non-GAAP measures is included in the financial tables in this press release.

Revenue for the third quarter of 2017 was $79.7 million, compared to $77.5 million in the third quarter of 2016. Net loss for the third quarter of 2017 was $10.2 million, or $0.25 per diluted share, compared to a net loss of $23.0 million, or $0.58 per diluted share in the third quarter of 2016. Non-GAAP net loss was $13.3 million, or $0.33 per diluted share for the third quarter of 2017, compared to non-GAAP net loss of $19.5 million, or $0.49 per diluted share for the same period of 2016.

Overall gross profit margin on a GAAP and non-GAAP basis for the third quarter of 2017 was 36%. Overall gross profit margin on a GAAP and non-GAAP basis for the third quarter of 2016 was 30% and 31%, respectively.

Operating expenses for the third quarter of 2017 were $54.7 million, compared to $52.1 million for the third quarter of 2016. Non-GAAP operating expenses for the third quarter of 2017 were $43.9 million, compared to $49.3 million for the third quarter of 2016. GAAP operating expenses for the third quarter of 2017 included $7.7 million in restructuring charges associated with our recent workforce reduction.

As of September 30, 2017, cash, investments and restricted cash totaled $183 million. Working capital at the end of the third quarter was $337 million, compared to $342 million at the end of the second quarter.

“The third quarter was highlighted by several exciting customer wins and strategic developments,” said Peter Ungaro, president and CEO of Cray. “We completed our recently announced strategic transaction with Seagate to broaden our storage portfolio and deepen our presence in the storage market. In supercomputing, our CS500 cluster was selected by KISTI, a leading research institution in South Korea. And just last week we announced that we are partnering with Microsoft to deliver an integrated cloud services offering which will allow customers unique access to our high-performance supercomputers in the Microsoft Azure cloud -- expanding our reach to new customers through the cloud and adding a complementary offering to our product set. While a slow-down in our primary target market has continued, I remain positive about our recent activity levels, win rates, and development efforts and I’m excited about our long-term prospects to drive growth.”

Outlook
A wide range of results remains possible for 2017. Several acceptances are planned for completion late in the fourth quarter, some of which will be challenging. Assuming Cray is able to complete these acceptances before year-end, Cray expects revenue for 2017 to be in the range of $400 million. GAAP and non-GAAP gross margins for the year are expected to be in the low- to mid-30% range. Non-GAAP operating expenses for 2017 are expected to be in the range of $180 million. For 2017, GAAP operating expenses are anticipated to be about $21 million higher than non-GAAP operating expenses, driven by share-based compensation, restructuring, and costs related to the Seagate transaction.

While a wide range of results remains possible and it is still early in the planning process, Cray expects 2018 annual revenue to grow in the range of 10% compared to Cray’s current 2017 outlook. Revenue is expected to be about $75 million in the first quarter of 2018.

Actual results for any future periods are subject to large fluctuations given the nature of Cray’s business.